The first thing I didn't know was that New Zealand hosts what Robinson calls "the leading wine-price comparison site", high praise from a world wine authority. It's called Wine-searcher, and it is indeed very good. I can already feel a couple of cases of Côtes du Rhone coming on.

The second thing I discovered, and this is where we veer back into the world of economics, was that Wine-searcher has apparently done a seriously large-scale study of price dispersion on the internet (250,000 US wine prices, 74,000 UK wine prices). I couldn't find the study itself on Wine-searcher's site, so I'm reliant on Robinson's summary of it, which was: "Wine-searcher’s analysis found that it was not uncommon in 2003 for US retailers to charge up to 50 per cent or even 100 per cent more than the middle price; now, thanks to greater transparency, this is virtually unheard of. According to Wine-searcher: “In the past it was relatively common for merchants to charge 25 per cent more than their competitors. Currently only 6.5 per cent of merchants in the US and 6.2 per cent in the UK try to charge 25 per cent or more over the median price whereas historically these percentages were 27.1 per cent and 12.7 per cent respectively".

Robinson comments that "there is less gouging today than there used to be", and I'm sure she's right. In theory, suppliers charging more like each other doesn't necessarily mean that the market's become more competitive: near-identical prices are as consistent with near-perfect collusion as they are with near-perfect competition. But it's rather unlikely that there has been global collusion amongst multiple retailers across many, many different wine prices, and much more likely that consumers are getting a better deal as increased transparency has reduced the capacity of sellers to quote exorbitantly out-of-line prices.

This was one of the things that was supposed to happen as the internet became more popular, but it's taken a while to arrive. When I went to the AEA meeting in Washington in January 2003, there was a session on price dispersion and price convergence over the internet, and (as I remember it) the gist was that, at that stage, online prices were, somewhat surprisingly, just as disperse as the bricks and mortar ones. This is consistent with Wine-searcher's finding that there was still widespread price dispersion at that time.

I've been trying to find studies of pricing of other goods and services over the internet, to see if the same pattern of reduced price dispersion and better deals for consumers holds true outside the world of wine. So far, it's been an uphill struggle. If anyone can point me to good research in this area, I'd appreciate hearing from you.

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Welcome to my economics blog

“The remarkable thing about economics is that once you've been exposed to the big ideas, they begin to show up everywhere … Economics offers insight into wealth, poverty, gender relations, the environment, discrimination, politics...How could that possibly not be interesting?” - Charles Wheelan, Naked Economics: Undressing the Dismal Science, 2002

"The soundest argument for markets ... is simply that, very frequently, they are the least bad of the alternatives. To paraphrase Winston Churchill's remark on democracy, markets are the worst form of resource allocation, except for all the others that have been tried" - Prof George Yarrow, Three Lectures on Privatization, Jagiellonian University, Krakow, April 1990

"And if there's one thing we've learned about flawed markets, it's that people flee from them, either physically or by resorting to back channels and black markets. Either way, flawed markets can undermine not just communities but whole nations" - Alvin Roth, Who Gets What - and Why, 2015

"Economic controversy is generally a thankless task. You cannot hope to make any impression on your opponent. Yet he is the only reader on whose interest you can count" - Francis Ysidro Edgeworth, Economic Journal, 1898

"There is some evil genius which sits at the elbow of every economist, forcing him into all sorts of contorted and unnecessary complications" - John Maynard Keynes, letter to Roy Harrod, August 1935

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